Exhibit
10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 12, 2016, by and between CACHET FINANCIAL
SOLUTIONS, INC., a Delaware corporation, with headquarters located at 18671 Lake Drive East, Southwest Tech Center A, Minneapolis,
MN 55317 (the “Company”), and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company,
with its address at 1040 First Avenue, Suite 190, New York, NY 10022 (the “Buyer”).


 


WHEREAS:


 


A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act;


 


B.
Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions
set forth in this Agreement, a Convertible Promissory Note of the Company, in the aggregate principal amount of $550,000.00 (together
with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the
terms thereof, in the form attached hereto as Exhibit A, the “Note”), convertible into shares of common stock,
$0.0001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and
conditions set forth in such Note;


 


C.
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of the Note as is
set forth immediately below its name on the signature pages hereto; and


 


D.
The Buyer further wishes to purchase, upon the terms and conditions stated in this Agreement, a warrant, in the form attached
hereto as Exhibit B (the “Warrant”), to purchase 89,110 shares of Common Stock (the “Warrant Shares”).


 


NOW
THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as
follows:


 


1.
Purchase and Sale of Note.


 


a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer
agrees to purchase from the Company, the Note in the principal amount as is set forth immediately below the Buyer’s name
on the signature pages hereto. 


 


b.
Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price for the Note to be issued and sold to
it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the
Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in an amount equal to
the Actual Amount of Purchase Price of Note as is set forth below the Buyer’s name on the signature pages hereto, and (ii)
the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.


 


c.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section
7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall
be 4:00 PM, Eastern Time on the date first written above, or such other mutually agreed upon time.


 


d.
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties (including via exchange of electronic signatures).


 




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e.
Concurrent Financing. The Buyer acknowledges that concurrently with the transactions contemplated by this Agreement, the
Company is conducting a separate private placement of its securities in the amount of of up to $3.4 million in gross proceeds.
The Company agrees, represents, warrants and confirms that: (i) it has disclosed to the Buyer all of the material terms and conditions
of such separate private placement, (ii) the rights of the investors in such separate private placement shall not be senior in
right to the rights of the Buyer under this Agreement other than a security interest granted on repayament to Trooien Capital
LLC, the Note and the Warrant and (iii) it has disclosed to the investors in such separate private placement the existence and
all of the material terms and conditions of the financing contemplated by this Agreement. It is agreed that such separate private
placement shall not be deemed a Subsequent Offering for purposes of Section 4(d) or for purposes of determining the exercise price
of the Warrant.


 


2.
Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company as of the Closing Date that:


 


a.
Investment Purpose. As of the Closing Date, the Buyer is purchasing the Note, the Warrant, the Warrant Shares and the shares
of Common Stock issuable upon conversion of or otherwise pursuant to the Note and such additional shares of Common Stock, if any,
as are issuable on account of interest on the Note pursuant to this Agreement, such shares of Common Stock being collectively
referred to herein as the “Conversion Shares” and, collectively with the Note, the Warrant and the Warrant Shares,
the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.


 


b.
Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D (an “Accredited Investor”).


 


c.
Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of the Buyer to acquire the Securities.


 


d.
Information. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue
to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any,
have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the
Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material
nonpublic information regarding the Company or otherwise and will not disclose such information unless such information is disclosed
to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section 3 below.


 


e.
Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities.


 


f.
Transfer or Re-sale. The Buyer understands that (i) the sale or resale of the Securities has not been and is not being
registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel (which may be the Legal Counsel Opinion (as defined below)) that
shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities
to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted
by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under
the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities
only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144,
or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”),
and the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance
and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any
sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein
to the contrary, the Securities may be pledged in connection with a bona fide margin account or other lending arrangement
secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and the Buyer in effecting such pledge of Securities shall be not required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.


 




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g.
Legends. The Buyer understands that until such time as the Note and, upon conversion of the Note in accordance with its
respective terms, the Conversion Shares, and, upon exercise of the Warrant in accordance with its respective terms, the Warrant
Shares, have been registered under the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Securities
may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of
the certificates for such Securities):


 


“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A
OR REGULATION S UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The
legend set forth above shall be removed (if the Company is then current on its SEC filings and customary Rule 144 information
is supplied with respect to a prospective sale) and the Company shall issue a certificate for the applicable shares of Common
Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable
shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository
Trust Company (“DTC”), if, unless otherwise required by applicable state securities laws, (a) such Security is registered
for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule
144A or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately
sold, or (b) the Company or the Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(n)
hereof) to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in compliance with applicable securities laws. In the
event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption from registration, such as Rule 144, Rule 144A or Regulation S, at the Deadline (as defined in the Note),
it will be considered an Event of Default pursuant to Section 3.2 of the Note.


 




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h.
Authorization; Enforcement. This Agreement has been duly and validly authorized by the Buyer and has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and except as may be limited by the
exercise of judicial discretion in applying principles of equity.


 


i.
Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature
pages hereto.


 


3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer as of the Closing Date
that:


 


a.
Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power
and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. Schedule 3(a), if attached hereto, sets forth a list of all of the Subsidiaries of
the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.


 


b.
Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this
Agreement, the Note and the Warrant, and to consummate the transactions contemplated hereby and thereby and to issue the Securities,
in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note, the Warrant and
the Conversion Shares and the Warrant Shares by the Company and the consummation by it of the transactions contemplated hereby
and thereby (including without limitation, the issuance of the Note and the Warrant and the issuance and reservation for issuance
of the Conversion Shares and the Warrant Shares issuable upon conversion or exercise of the Note and the Warrant) have been duly
authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors,
or its shareholders, is required, (iii) this Agreement, the Note and the Warrant (together with any other instruments executed
in connection herewith or therewith) have been duly executed and delivered by the Company by its authorized representative, and
such authorized representative is the true and official representative with authority to sign this Agreement, the Note and the
Warrant and the other instruments documents executed in connection herewith or therewith and bind the Company accordingly, and
(iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note and the Warrant, each of such instruments
will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their
terms.


 


c.
Capitalization; Governing Documents. As of September 30, 2016, the authorized capital stock of the Company consists of:
500,000,000 authorized shares of Common Stock, of which 2,981,517 shares were issued and outstanding and 20,000,000 authorized
shares of preferred stock, none of which 43,530 were issued and outstanding. All of such outstanding shares of capital stock of
the Company, and the Conversion Shares and the Warrant Shares, are, or upon issuance will be, duly authorized, validly issued,
fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.
As of the effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC filings
of the Company or as set forth on Schedule 3(c) (i) there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of
its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there
are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of any of the Securities. The Company has furnished to the
Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate
of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms
of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof
in respect thereto which have not been disclosed in the SEC Filings.


 




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d.
Issuance of Conversion Shares and Warrant Shares. The Conversion Shares are duly authorized and reserved for issuance and,
upon conversion of the Note in accordance with its terms, will be validly issued, fully paid and non-assessable, and free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof. The Warrant Shares
are duly authorized and reserved for issuance and, upon exercise of the Warrant in accordance with its terms, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.


 


e.
Reserved.


 


f.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock
upon the conversion of the Note, the Conversion Shares, and, upon exercise of the Warrant, the Warrant Shares. The Company further
acknowledges that its obligation to issue, upon conversion of the Note or exercise of the Warrant, the Conversion Shares and the
Warrant Shares, respectively, in accordance with this Agreement, the Note and the Warrant is absolute and unconditional regardless
of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.


 


g.
Ranking; No Conflicts. The Note is and shall be pari passu with other unsecured indebtedness of the Company.The execution,
delivery and performance of this Agreement, the Note and the Warrant by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the
Conversion Shares and the Warrant Shares) will not (i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, note, evidence of indebtedness, indenture, patent, patent license or
instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities is subject) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse
Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor
any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries
is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its
Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and any applicable state securities laws, and except for the consent of Lincoln Park Capital
Fund, LLC, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third party in order for
it to execute, deliver or perform any of its obligations under this Agreement, the Note and the Warrant in accordance with the
terms hereof or thereof or to issue and sell the Note and the Warrant in accordance with the terms hereof and, upon conversion
of the Note, issue Conversion Shares and, upon exercise of the Warrant, the Warrant Shares. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof. If the Company is listed on the Over-the-Counter Bulletin Board, the OTCQB Market operated by
OTC Markets Group, Inc. or any successor to such markets (collectively, the “OTCBB”), the Company is not in violation
of the listing requirements of the OTCBB and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB
in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.


 




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h.
SEC Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended
or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents,
or otherwise disclosed in the SEC Documents or Schedule 3(c), the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to September 30, 2016, and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to
be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition
or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act. 


 


i.
Absence of Certain Changes. Since September 30, 2016, there has been no material adverse change and no material adverse
development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects
or 1934 Act reporting status of the Company or any of its Subsidiaries.


 


j.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. The SEC Documents contain a complete list and summary description of any pending or,
to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.


 




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k.
Intellectual Property. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use
all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business
as now operated (and, as presently contemplated to be operated in the future); except as set forth in the SEC Documents, there
is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which
challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct
its business as now operated (and, as presently contemplated to be operated in the future); except as set forth in the SEC Documents,
to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services
and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any
facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of their Intellectual Property.


 


l.
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect.


 


m.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside
on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None
of the Company’s tax returns is presently being audited by any taxing authority.


 


n.
Transactions with Affiliates. Except as disclosed in the SEC Documents, for arm’s length transactions pursuant to
which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than
the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options described in
the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.


 


o.
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s
reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the
1933 Act).


 




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p.
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of
its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice
or a recommendation and is merely incidental to the Buyer’s purchase of the Securities. The Company further represents to
the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of
the Company and its representatives.


 


q.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.


 


r.
No Brokers. Except for Craft Capital Management LLC, the Company has taken no action which would give rise to any claim
by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated
hereby.


 


s.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”),
and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of
the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since September 30, 2016, neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.


 


t.
Environmental Matters.


 


(i)
There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the
Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment,
actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common
law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice
with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection
with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws relating
to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.


 


(ii)
Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during
the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the
Company’s or any of its Subsidiaries’ business.


 




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(iii)
There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.


 


u.
Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such for liens held by Trooien Capital, LLC and certain
investors which will be granted liens upon payoff of Trooien Capital LLC, or such as would not have a Material Adverse Effect.
Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as would not have a Material Adverse Effect.


 


v.
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written
request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’
liability coverage, errors and omissions coverage, and commercial general liability coverage.


 


w.
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.


 


x.
Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the
Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.


 


y.
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become
absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.
The Company’s financial statements for its most recent fiscal year end and interim financial statements have been prepared
assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.


 


z.
No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company.


 


aa.
No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any
of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in
its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.


 




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bb.
No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act
(a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company
has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.


 


cc.
Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or
indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other securities of the Company.


 


dd.
Breach of Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the representations
or warranties set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement,
it will be considered an Event of Default under Section 3.4 of the Note.


 


4.
ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS. 


 


a.
Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6
and 7 of this Agreement.


 


b.
Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or
prior to the Closing Date.


 


c.
Use of Proceeds. The Company shall use the proceeds to repay Trooien Capital LLC, and to use any remaining proceeds for
general corporate purposes, and not for the repayment of any indebtedness owed to officers, directors or employees of the Company
or their affiliates or in violation or contravention of any applicable law, rule or regulation.


 


d.
Right of Participation in Subsequent Offerings.


 


i.       From
the date first written above until the earlier to occur of (A) Maturity Date and (B) that date that the Note (including all principal,
interest, fees and expenses related thereto) is earlier fully repaid or converted, the Company will not, (i) directly or indirectly,
offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase
or other disposition of) any of its or its Subsidiaries’ debt, equity or equity equivalent securities, including without
limitation any debt, preferred shares or other instrument or security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for Common Stock (any such offer, sale, grant, disposition or announcement being
referred to as a “Subsequent Offering”) or (ii) enter into any definitive agreement with regard to the foregoing,
in each case unless the Company following such offering the Company complies with this Section 4(d). This Section 4(d) shall not
apply to securities issued pursuant to employee benefit plans.


 




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ii.       The
Company shall deliver to the Buyer an irrevocable written notice (the “Offer Notice”) of any issuance or sale or exchange
(the “Offer”) of the securities offered (the “Offered Securities”) in a Subsequent Offering, which Offer
Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which Offered Securities
were sold (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (z) offer to issue and sell to or exchange with the Buyer at least ten percent (10%) of the Offered Securities
(the “Subscription Amount”).


 


iii.       To
accept an Offer, in whole or in part, the Buyer must deliver a written notice to the Company prior to the end of the tenth (10th)
business day after the Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of
the Subscription Amount that the Buyer elects to purchase (the “Notice of Acceptance”).


 


iv.       Notwithstanding
anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company shall deliver to the Buyer a new Offer Notice and the Offer Period shall expire
on the tenth (10th) business day after the Buyer’s receipt of such new Offer Notice.


 


v.       If
by the fifteenth (15th) business day following delivery of the Offer Notice no public disclosure regarding a transaction
with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received
by the Buyer, such transaction shall be deemed to have been abandoned and the Buyer shall not be deemed to be in possession of
any material, non-public information with respect to the Company.


 


As
used in this Agreement, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.


 


e.
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Buyer in order to enforce
any right or remedy under this Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding
any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby,
it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement
or instrument contemplated thereby for payments which under New York law are in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event
shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under New York law
in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement
or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed
by New York law and applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased
or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated
thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness evidenced
by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by the
Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess
to be at the Buyer’s election.


 


f.
Restriction on Activities. Commencing as of the date first above written, and until the sooner of the six month anniversary
of the date first written above or payment of the Note in full, or full conversion of the Note, the Company shall not, directly
or indirectly, without the Buyer’s prior written consent, which consent shall not be unreasonably withheld: (a) change the
nature of its business; (b) sell, divest, acquire, change the structure of any material assets other than in the ordinary course
of business; or (c) enter into variable rate debt transactions (i.e., transactions were the conversion or exercise price of the
security issued by the Company varies based on the market price of the Common Stock), whether a transaction similar to the one
contemplated hereby or any other investment.


 




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g.
Listing. The Company will, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common
Stock on the OTCBB or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink
Sheets electronic quotation system) and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.
The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or electronic
quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing
on such exchanges and quotation systems.


 


h.
Corporate Existence. The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its corporate
existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation
or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction
(i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith
and (ii) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the OTCBB, any tier of the
NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.


 


i.
No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.


 


j.
Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in
this Section 4, in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an
Event of Default under Section 3.4 of the Note.


 


k.
Compliance with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, any Conversion
Shares, the Warrant or any Warrant Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company
shall continue to be subject to the reporting requirements of the 1934 Act. During the period that the Buyer beneficially owns
the Note or the Warrant, if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including,
without limitation, the failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the Company
has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to
satisfy any condition set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then, as partial relief for
the damages to the Buyer by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall
not be exclusive of any other remedies available pursuant to this Agreement, the Note, the Warrant, or at law or in equity), the
Company shall pay to the Buyer an amount in cash equal to two percent (2%) of the Purchase Price on each of the day of a Public
Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the date
such Public Information Failure is cured. The payments to which a holder shall be entitled pursuant to this Section 4(k) are referred
to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier
of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (iii) the third
business day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company
fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest
at the rate of 1% per month (prorated for partial months) until paid in full.


 


l.
Acknowledgement Regarding Buyer’s Trading Activity. The Company acknowledges and agrees that (i) the Buyer has not
been asked to agree, nor has the Buyer agreed, to desist from purchasing or selling, long and/or short, securities of the Company,
or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term;
(ii) the Buyer, and counter-parties in “derivative” transactions to which any the Buyer is a party, directly or indirectly,
presently may have a “short” position in the Common Stock, and (iii) the Buyer shall not be deemed to have any affiliation
with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that the Buyer may engage in hedging and/or trading activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Conversion Shares are being determined
and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest
in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement or any of the documents
executed in connection herewith.


 




    	 	 12	 



    	 		 



    

 


m.
Disclosure of Transactions and Other Material Information. By December 16. 2016, the Company shall file a Current Report
on Form 8-K describing the terms of the transactions contemplated by this Agreement in the form required by the 1934 Act and attaching
this Agreement, the form of Note (the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, the
Buyer shall not be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or
any of their respective officers, directors, employees or agents that is not disclosed in the 8-K Filing. In addition, effective
upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and the Buyer or any of its affiliates, on the other hand, shall
terminate.


 


n.
Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost)
for promptly supplying to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel (the
“Legal Counsel Opinion”) to the effect that the resale of the the Warrant Shares and the Conversion Shares by the
Buyer or its affiliates, successors and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule
144 (provided the requirements of Rule 144 are satisfied and provided the Warrant Shares and the Conversion Shares are not then
registered under the 1933 Act for resale pursuant to an effective registration statement). Should the Company’s legal counsel
fail for any reason to issue the Legal Counsel Opinion, the Buyer may (at the Company’s cost) secure another legal counsel
to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept such opinion. The Company hereby
agrees that it may never take the position that it is a “shell company” in connection with its obligations under this
Agreement or otherwise.


 


o.
Piggyback Registration Rights. The Company hereby grants to the Buyer the registration rights set forth on Exhibit C
hereto.


 


p.
Most Favored Nation. While the Note or any principal amount, interest or fees or expenses due thereunder remain outstanding
and unpaid, the Company shall not enter into any public or private offering of its securities (including securities convertible
into shares of Common Stock) with any individual or entity (an “Other Investor”) that has the effect of establishing
rights or otherwise benefiting such Other Investor in a manner more favorable in any material respect to such Other Investor than
the rights and benefits established in favor of the Buyer by this Agreement, the Note or the Warrant unless, in any such case,
the Buyer has been provided with such rights and benefits pursuant to a definitive written agreement or agreements between the
Company and the Buyer.


 


q.
Subsequent Variable Rate Transactions. From the date hereof until such time as the Buyer no longer holds the Note or any
of the Conversion Shares, the Company shall be prohibited from effecting or entering into an agreement involving a Variable Rate
Transaction, including, without limitation, in connection with the Company’s private placement described in Section 1(e)
hereof. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with,
the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled
to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right
to collect damages. Buyer shall not unreasonably delay or withhold its consent to any subsequent Variable Rate Transaction.


 




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5.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to
issue certificates, registered in the name of the Buyer or its nominee, upon conversion of the Note, the Conversion Shares and
upon exercise of the Warrant, the Warrant Shares, in such amounts as specified from time to time by the Buyer to the Company in
accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes
to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable
Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision
to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer
agent to the Company and the Company. Prior to registration of the Warrant Shares or the Conversion Shares under the 1933 Act
or the date on which the Warrant Shares or Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the
number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5 will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the
Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring
(or issuing)(electronically or in certificated form) any certificate for Securities to be issued to the Buyer upon conversion
of or otherwise pursuant to the Note or upon exercise of or otherwise pursuant to the Warrant as and when required by the Note,
the Warrant and this Agreement; (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays,
and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any Securities issued to the Buyer upon conversion of or otherwise pursuant to the Note or upon
exercise of or otherwise pursuant to the Warrant as and when required by the Note, the Warrant and this Agreement and (iv) it
will provide any required corporate resolutions and issuance approvals to its transfer agent within one business day of each conversion
of the Note or exercise of the Warrant. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement
set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.
If the Buyer provides the Company, at the cost of the Company, with (i) an opinion of counsel in form, substance and scope customary
for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration
under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities
can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Securities, promptly instruct
its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as
specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.


 


6.
Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note
to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions
thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion:


 


a.
The Buyer shall have executed this Agreement and delivered the same to the Company.


 


b.
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.


 


c.
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Date, as though made at that time (except for representations and warranties that speak as of a specific date),
and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.


 




    	 	 14	 



    	 		 



    

 


d.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.


 


7.
Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note, on
the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:


 


a.
The Company shall have executed this Agreement and delivered the same to the Buyer.


 


b.
The Company shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and in accordance
with Section 1(b) above.


 


c.
The Company shall have delivered to the Buyer the duly executed Warrant.


 


d.
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company’s Transfer Agent.


 


e.
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made
and as of Closing Date, as though made at such time (except for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.


 


f.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.


 


g.
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but
not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934
Act reporting obligations.


 


h.
Trading in the Common Stock on the OTCBB shall not have been suspended by the SEC, FINRA or the OTCBB.


 


i.
The Company shall have delivered to the Buyer (i) a certificate evidencing the formation and good standing of the Company and
each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction, as of a date within ten (10) days of the Closing Date and (ii) resolutions adopted by the Company’s
Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents,
instruments and transactions contemplated hereby.


 


j.
The Company shall have fully repaid the entire principal amount and all interest and other payments due under those certain convertible
promissory notes issued by the Company pursuant to those certain securities purchase agreements, dated June 9, 2016, between the
Company and Old Main Capital, LLC, River North Equity, LLC, Kodiak Capital Group, LLC, and DiamondRock, LLC. As a condition
to Closing, the Company shall furnish to the Buyer customary payoff letters or other satisfactory evidence in the discretion of
the Buyer that such obligations have been fully repaid.


 




    	 	 15	 



    	 		 



    

 


8.
Governing Law; Miscellaneous.


 


a.
Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions
contemplated by this Agreement, the Note, the Warrant or any other agreement, certificate, instrument or document contemplated
hereby shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York.
The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall
be entitled to recover from the other party its reasonable attorney’s fees and costs. Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement,
the Note, the Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a
copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner
permitted by law.


 


b.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. A facsimile or .pdf signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or .pdf signature.
Delivery of a counterpart signature hereto by facsimile or email/.pdf transmission shall be deemed validly delivery thereof.


 


c.
Construction; Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not
be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.


 


d.
Severability. In the event that any provision of this Agreement, the Note, the Warrant or any other agreement or instrument
delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute
or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision of this Agreement, the Note, the Warrant or any other agreement, certificate, instrument or document contemplated
hereby or thereby.


 


e.
Entire Agreement; Amendments. This Agreement, the Note, the Warrant and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement or any agreement or instrument contemplated hereby may be waived or amended other than
by an instrument in writing signed by the Buyer.


 


f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:


 




    	 	 16	 



    	 		 



    

 


If
to the Company, to:


 


CACHET
FINANCIAL SOLUTIONS, INC.


18671
Lake Drive East


Southwest
Tech Center A


Minneapolis,
MN 55317


Attention:
Chief Financial Officer


  


If
to the Buyer:


 


FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC


1040
First Avenue, Suite 190


New
York, NY 10022


Attn:
Eli Fireman


e-mail:
eli@firstfirecapital.com


 


With
a copy by e-mail only to (which copy shall not constitute notice):


 


ELLENOFF
GROSSMAN & SCHOLE LLP


1345
Avenue of the Americas


New
York, NY 10105


Attn:
Lawrence A. Rosenbloom, Esq.


e-mail:
lrosenbloom@egsllp.com


 


g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder
to any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as
that term is defined under the 1934 Act, without the consent of the Company.


 


h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.


 


i.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The
Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.


 


j.
Publicity. The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any
press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press
release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release
prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).


 




    	 	 17	 



    	 		 



    

 


k.
Expense Reimbursement; Further Assurances. At the Closing to occur as of the Closing Date, the Company shall pay on behalf
of the Buyer or reimburse the Buyer for its legal fees and expenses incurred in connection with this Agreement in the amount of
$20,000. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


 


l.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.


 


m.
Indemnification. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities
hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Note or the Warrant, the
Company shall defend, protect, indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement, the Note or the Warrant or any other agreement, certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this
Agreement, the Note or the Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby
or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes
a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance
or enforcement of this Agreement, the Note or the Warrant or any other agreement, certificate, instrument or document contemplated
hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Securities, or (iii) the status of the Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by this Agreement. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law.


 


n.
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Agreement, the Note or the Warrant will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of this Agreement, the Note or the Warrant, that the
Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement, the Note or the Warrant
and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond
or other security being required.


 


o.
Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to the
Note or the Warrant, or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.


  


p.
Failure or Indulgence Not Waiver. No failure or delay on the part of the Buyer in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Buyer existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


[Signature
Page Follows]


 




    	 	 18	 



    	 		 



    

 


IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.


 


CACHET
FINANCIAL SOLUTIONS, INC.


 


	By:	/s/
    Bryan Meier	 
	Name:	Bryan Meier	 
	Title:	CFO	 


 


FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC


 


	By:	FirstFire
    Capital Management LLC, its manager	 
	 	 	 
	By:	/s/
    Eli Fireman	 
	 	ELI
    FIREMAN	 


 


SUBSCRIPTION
AMOUNT:


 


	Principal
    Amount of Note: $550,000.00
	Actual
    Amount of Purchase Price of Note: $500,000.00


 


Residency
of Buyer: New York


 




    	 	 19	 



    	 		 



    

 


EXHIBIT
A


 


FORM
OF NOTE


 


[attached
hereto]


 






    	 	 20	 



    	 		 



    

 


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


	Principal
    Amount: $550,000.00	Issue
    Date: December 12, 2016
	Actual
    Amount of Purchase Price: $500,000.00	 


 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, CACHET FINANCIAL SOLUTIONS, INC., a Delaware corporation (hereinafter called the “Borrower”
or the “Company”), hereby promises to pay to the order of FIRSTFIRE GLOBAL OPPORTUNITIES FUND LLC, a Delaware
limited liability company, or registered assigns (the “Holder”), in the form of lawful money of the United States
of America by June [__], 2017 (the “Maturity Date”), the principal sum of $550,000.00, which amount is the $500,000
actual amount of the purchase price hereof plus a 10% original issue discount (subject to adjustment pursuant to Section 3.1)
(the “Principal Amount”) and to pay interest on the unpaid Principal Amount hereof at the rate of five percent (5%)
(the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and
payable, whether at maturity or upon acceleration or by prepayment or otherwise.


 


It
is further acknowledged and agreed that the Principal Amount owed by Borrower under this Note shall be increased by the amount
(not to exceed $500) of all expenses incurred by the Holder relating to the conversion of this Note into shares of Common Stock.
All such expenses shall be deemed added to the Principal Amount hereunder to the extent such expenses are paid by the Holder.


 


This
Note may not be prepaid or repaid in whole or in part except as otherwise explicitly set forth herein.


 


This
Note shall be pari passu with the Company’s other unsecured indebtedness.


 


Interest shall commence accruing on the
date that the Note is fully funded and shall be computed on the basis of a 365-day year and the actual number of days elapsed.
Any Principal Amount or interest on this Note which is not paid when due shall bear interest at the rate of fifteen percent (15%)
per annum from the due date thereof until the same is paid (“Default Interest”).


 


All
payments due hereunder (to the extent not converted into shares of common stock, $0.0001 par value per share, of the Borrower
(the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.
All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date.


 


Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”).
As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in the city of New York, New York are authorized or required by law or executive order to remain closed. As used herein,
the term “Trading Day” means any day that shares of Common Stock are listed for trading or quotation on the OTCBB
(as defined in the Purchase Agreement), any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.


 




    	 	 21	 



    	 		 



    

 


This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.


 


The
following terms shall apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1
Conversion Right. The Holder shall have the right, at any time to convert all or any portion of the then outstanding and
unpaid Principal Amount and interest (including any Default Interest) into fully paid and non-assessable shares of Common Stock,
as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such
Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as defined below) determined as provided herein
(a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion
of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of this Note or the unexercised or unconverted portion of any other security
of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number
of Conversion Shares issuable upon the conversion of the portion of this Note with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the then outstanding
shares of Common Stock. For purposes of the proviso set forth in the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”),
and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, however,
that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’
prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or
such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of Conversion Shares to
be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable
Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A
(the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided
that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result
in, notice) to the Borrower before 4:00 p.m., New York, New York time on such conversion date (the “Conversion Date”).
The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the Principal Amount
of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if
any, on such Principal Amount at the Interest Rate to the Conversion Date, plus (3) at the Holder’s option, Default
Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2).


 


1.2
Conversion Price.


 


(a)
Calculation of Conversion Price. The per share conversion price into which Principal Amount and interest (including any
Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion Price”)
shall be equal to [TBD]1 (the “Fixed Conversion Price”); provided, however that from and after the
occurrence of any Event of Default hereunder, the Conversion Price shall be a price (the “Default Conversion Price”)
equal to the lower of: (i) the Fixed Conversion Price or (ii) 55% multiplied by the lowest sales price of the Common Stock during
the twenty-one (21) consecutive Trading Day period immediately preceding the Trading Day that the Company receives a Notice of
Conversion; provided, further, however, and notwithstanding the above calculation of the Conversion Price, if, prior to
the repayment or conversion of this Note, in the event the Borrower consummates a registered or unregistered primary offering
of its securities for capital raising purposes (a “Primary Offering”) other than Excepted Issuances (as defined below),
the Holder shall have the right, in its discretion, to (x) demand repayment in full of an amount equal to any outstanding Principal
Amount and interest (including Default Interest) under this Note as of the closing date of the Primary Offering or (y) convert
any outstanding Principal Amount and interest (including any Default Interest) under this Note into Common Stock at the closing
of such Primary Offering at a Conversion Price equal to the lower of (i) the Fixed Conversion Price and (ii) a 10% discount to
the offering price to investors in the Primary Offering; provided, however, that from and after the occurrence of any Event
of Default hereunder, the Conversion Price shall equal the lower of (A) the Fixed Conversion Price and (B) a 20% discount to the
offering price to investors in the Primary Offering. The Borrower shall provide the Holder no less than ten (10) business days’
notice of the anticipated closing of a Primary Offering and an opportunity to exercise its conversion rights in connection therewith
or if such notice is not given prior to the closing, for ten (10) business days after the notice is given.


 





 



1
FirstFire to choose on signing of documents: either (A) 200% of the closing stock price on 12/14/16 or (B) the lesser of
(i) $5.55 per share or (ii) a price per share equal to eighty percent (80%) of the price per share issued in the next Subsequent
Offering (as defined the SPA). 


 




    	 	 22	 



    	 		 



    

 


(b)
Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the
event the Borrower (i) makes a public announcement that it intends to be acquired by, consolidate or merge with any other corporation
or entity (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged)
or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the
Borrower) publicly announces a tender offer to purchase 50% or more of the Common Stock (or any other takeover scheme) (any such
transaction referred to in clause (i) or (ii) being referred to herein as a “Change in Control” and the date of the
announcement referred to in clause (i) or (ii) is being referred to herein as the “Announcement Date”), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Fixed Conversion Price and (y) a 25% discount to the Acquisition Price (as defined below).
From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in Section
1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed
Change in Control for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the
Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly
announces the termination or abandonment of the proposed Change in Control which caused this Section 1.2(b) to become operative.
For purposes hereof, “Acquisition Price” shall mean a price per share of Common Stock derived by dividing (x) the
total consideration (in cash, equity, earn-out or similar payments or otherwise) paid or to be paid to the Borrower or its shareholders
in the Change in Control transaction by (y) the number of authorized shares of Common Stock outstanding as of the business day
prior to the Announcement Date.


 


1.3
Authorized and Reserved Shares. The Borrower covenants that during the period the conversion right exists, the Borrower
will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide
for the issuance of a number of Conversion Shares equal to the greater of: (a) 15,000,000 shares of Common Stock or (b) the sum
of (i) the number of Conversion Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount
or interest) as of any issue date (taking into consideration any adjustments to the Conversion Price pursuant to Section 2 hereof
or otherwise) multiplied by (ii) twenty five (25) (the “Reserved Amount”). The Reserved Amount shall be recalculated
each month and the Company shall notify its transfer agent and the Holder in writing by the first day of the following month of
the new Reserved Amount. In the event that the Borrower shall be unable to reserve the entirety of the Reserved Amount (the “Reserve
Amount Failure”), the Borrower shall promptly take all actions necessary to increase its authorized share capital to accommodate
the Reserved Amount (the “Authorized Share Increase”), including without limitation, all board of directors actions
and approvals and promptly (but no less than 60 days following the calling and holding a special meeting of its shareholders no
more than 60 days following the Reserve Amount Failure to seek approval of the Authorized Share Increase via the solicitation
of proxies. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved Amount, regardless
of any prior conversions. The Borrower represents that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which
would change the number of Conversion Shares into which this Note shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved, free from preemptive rights, for conversion of this Note. The Borrower (i) acknowledges that it
has irrevocably instructed its transfer agent to issue certificates for the Conversion Shares or instructions to have the Conversion
Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees that its issuance of this Note shall constitute full authority
to its officers and agents who are charged with the duty of executing stock certificates or cause the Company to electronically
issue shares of Common Stock to execute and issue the necessary certificates for the Conversion Shares or cause the Conversion
Shares to be issued as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions of this Note.


 




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If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under this Note.


 


1.4
Method of Conversion.


 


(a)
Mechanics of Conversion. This Note may be converted by the Holder in whole or in part, on any Trading Day, at any time
from time to time after the Issue Date, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 4:00 p.m., New York, New York time). Any Notice of Conversion
submitted after 4:00 p.m., New York, New York time, shall be deemed to have been delivered and received on the next Trading Day.


 


(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid Principal Amount is so converted. The Holder and the Borrower shall maintain records showing the Principal Amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder
first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order
of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes)
may request, representing in the aggregate the remaining unpaid Principal Amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted Principal Amount of this Note represented by this Note may be less than the amount
stated on the face hereof.


 


(c)
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 


(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f)
hereof) within two (2) Trading Days after such receipt (the “Deadline”) (and, solely in the case of conversion of
the entire unpaid Principal Amount and interest (including any Default Interest) under this Note, surrender of this Note). If
the Company shall fail for any reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the
number of Conversion Shares or to which the Holder is entitled hereunder and register such Conversion Shares on the Company’s
share register or to credit the Holder’s balance account with DTC (as defined below) for such number of Conversion Shares
to which the Holder is entitled upon the Holder’s conversion of this Note (a “Conversion Failure”), then, in
addition to all other remedies available to the Holder, (i) the Company shall pay in cash to the Holder on each day after the
Deadline and during such Conversion Failure an amount equal to 2.0% of the product of (A) the sum of the number of Conversion
Shares not issued to the Holder on or prior to the Deadline and to which the Holder is entitled and (B) the closing sale price
of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Conversion
Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written notice to the Company, may void
its Notice of Conversion with respect to, and retain or have returned, as the case may be, any portion of this Note that has not
been converted pursuant to such Notice of Conversion; provided that the voiding of an Notice of Conversion shall not affect the
Company’s obligations to make any payments which have accrued prior to the date of such notice. In addition to the foregoing,
if on or prior to the Deadline the Company shall fail to issue and deliver a certificate to the Holder and register such Conversion
Shares on the Company’s share register or credit the Holder’s balance account with DTC for the number of Conversion
Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation
pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise
that the Holder anticipated receiving from the Company, then the Company shall, within three (3) Trading Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other reasonable and customary out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion
Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the
Common Stock on the date of exercise. Nothing shall limit the Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing the Conversion Shares (or to electronically
deliver such Conversion Shares) upon the conversion of this Note as required pursuant to the terms hereof.


 




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(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding Principal Amount
and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect such
conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion
of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash
or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein,
the Borrower’s obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery
of the Conversion Shares as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence
of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of
any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation
of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise
limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice
of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New
York, New York time, on such date.


 


(f)
Delivery of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion
Shares issuable upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs,
upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to electronically transmit the Conversion Shares issuable upon conversion
hereof to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.


 


1.5
Concerning the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the
Purchase Agreement)) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration or (iii) such shares are sold or transferred pursuant to Rule 144, Rule 144A or Regulation S or (iv) such
shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise
transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement).
Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time
as the Conversion Shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate
for the Conversion Shares that has not been so included in an effective registration statement or that has not been sold pursuant
to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in
the following form, as appropriate:


 




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“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The
legend set forth above shall be removed (if the Company is then current in its SEC filings and customary Rule 144 is supplied
with respect to a prospective sale) and the Company shall issue to the Holder a certificate for the applicable Conversion Shares
without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic
delivery by crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable state securities
laws: (a) such Conversion Shares are registered for sale under an effective registration statement filed under the 1933 Act or
otherwise may be sold pursuant to Rule 144, Rule 144A or Regulation S without any restriction as to the number of securities as
of a particular date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as
contemplated by and in accordance with Section 4(m) of the Purchase Agreement) to the effect that a public sale or transfer of
such Conversion Shares may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so
that the sale or transfer is effected. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated
with any such issuance. The Holder agrees to sell all Conversion Shares, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable securities laws. In the event that the Company does not accept
the opinion of counsel provided by the Holder with respect to the transfer of Conversion Shares pursuant to an exemption from
registration, such as Rule 144, Rule 144A or Regulation S, at the Deadline, notwithstanding that the conditions of Rule 144, Rule
144A or Regulation S, as applicable, have been met, it will be considered an Event of Default under this Note.


 


1.6
Effect of Certain Events.


 


(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any
other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of
Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation
of and as a condition to such transaction an amount equal to the Default Amount (defined in Section 3.22) or (ii) be treated pursuant
to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.


 




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(b)
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion
of all of this Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number
of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance
of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the
Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable
upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had
this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this
Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and
of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not effectuate any
transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, at least thirty (30) days prior
written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of
shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares,
recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert
this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations
of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or
share exchanges.


 


(c)
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock
of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.


 


(d)
Purchase Rights. If, at any time when all or any portion of this Note is issued and outstanding, the Borrower issues any
convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”)
pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had
held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations
on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.


 


(e)
Dilutive Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells
or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants
any right to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant
or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise
entitle any person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of any
convertible notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective price per share
that is lower than the then Fixed Conversion Price (such lower price, the “Base Conversion Price” and such issuances,
collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other securities so
issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share that is lower than the Fixed Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the
Fixed Conversion Price shall be reduced to a price equal the Base Conversion Price. If the Company enters into a Variable Rate
Transaction, despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock
or Common Stock Equivalents at the lowest possible price per share at which such securities could be issued in connection with
such Variable Rate Transaction. Such adjustment shall be made whenever such Common Stock or other securities are issued. Notwithstanding
the foregoing, no adjustment will be made under this Section 1.6(e) in respect of an Exempt Issuance. In the event of an issuance
of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be calculated as if
all such securities were issued at the initial closing.


 




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An
“Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or other securities to employees, officers
or directors of the Company pursuant to any stock or option or similar equity incentive plan (including repricing) duly adopted
for such purpose, by a majority of the non-employee members of the Company’s Board of Directors or a majority of the members
of a committee of non-employee directors established for such purpose in a manner which is consistent with the Company’s
prior business practices; (b) securities issued pursuant to a merger, consolidation, acquisition or similar business combination
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities; (c) securities issued pursuant agreements
issued and outstanding as of the date hereof or (d) securities issued to third party investors at not less than 90% of the closing
price on the previous Trading Day with warrant coverage not to exceed the Company’s past practice ((principal amount x 90%)/exercise
price).


 


(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.


 


1.7
Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal
United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall
be 4.99% of the total shares outstanding on the Initial Closing Date (as defined in the Purchase Agreement), subject to equitable
adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating
to the Common Stock occurring after the Issue Date. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate
any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue
shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be
considered an Event of Default under Section 3.3 of the Note.


 


1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the Conversion Shares covered thereby
(other than the Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated
portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s
rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates
for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder
because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not
received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline
with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its
status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with
respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note
to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been
converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure to convert this
Note.


 




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1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time prior to or as of (but not following)
the Maturity Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice
to the Holder of the Note, to prepay the outstanding Principal Amount and interest (including any Default Interest) then due under
this Note, in whole or in part, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to the sum of: (w) (A) within 30 days of the date hereof, 105%, (B) between 31 and 60 days of
the date hereof, 110%, (C) between 61 days and 120 days of the date hereof, 115%, (D) between 121 days and 150 days of the date
hereof, 125% and (E) thereafter, 135%, multiplied by the Principal Amount plus (x) accrued and unpaid interest on the Principal
Amount to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and
(x).


 


1.10
Repayment from Proceeds. While any portion of the outstanding Principal Amount and interest (including Default Interest)
under this Note are due and owing, if the Company receives cash proceeds from any source or series of related or unrelated sources
related to financing transactions, including but not limited to, from the issuance of equity or debt, the issuance of securities
pursuant to an equity line of credit of the Borrower or the sale of assets not in the ordinary course of business, the Borrower
shall, within three (3) business day of Borrower’s receipt of such proceeds, inform the Holder of such receipt, following
which the Holder shall have the right in its sole discretion to require the Borrower to immediately apply all or any portion of
such proceeds to repay all or any portion of the outstanding Principal Amount and interest (including any Default Interest) then
due under this Note. Failure of the Borrower to comply with this provision shall constitute an Event of Default. In the event
that such proceeds are received by the Holder prior to the Maturity Date, the required prepayment shall be subject to the terms
of Section 1.9 herein. This Section shall not apply to (i) issuances of $3.4 million referred to in Section 1(e) of the Securities
Purchase Agreement, (ii) exercises of warrants and (iii) necessary working capital financings such as for payroll (“Excepted
Issuances”).


 


ARTICLE
II. RANKING AND CERTAIN COVENANTS


 


2.1
Ranking. The obligations of the Borrower under this Note shall rank pari passu with the Company’s other unsecured
indebtedness. The obligations of the Borrower under this Note are unsecured.


 


2.2
Other Indebtedness. So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly
or indirectly through any Subsidiary or affiliate) incur or guarantee any Indebtedness that is senior to (in priority of payment
and performance) the Borrower’s obligations hereunder other than the grant of a security interest to certain investors upon
pay off of amounts to Trooien Capital LLC. As used in this Section 2.2, the term “Borrower” means the Borrower and
any Subsidiary of the Borrower. As used herein, the term “Indebtedness” means (a) all indebtedness of the Borrower
for borrowed money or for the deferred purchase price of property or services, including any type of letters of credit, but not
including deferred purchase price obligations in place as of the Issue Date and as disclosed in the SEC Documents or obligations
to trade creditors incurred in the ordinary course of business, (b) all obligations of the Borrower evidenced by notes, bonds,
debentures or other similar instruments, (c) purchase money indebtedness hereafter incurred by the Borrower to finance the purchase
of fixed or capital assets, including all capital lease obligations of the Borrower which do not exceed the purchase price of
the assets funded, (d) all guarantee obligations of the Borrower in respect of obligations of the kind referred to in clauses
(a) through (c) above that the Borrower would not be permitted to incur or enter into, and (e) all obligations of the kind referred
to in clauses (a) through (d) above that the Borrower is not permitted to incur or enter into that are secured and/or unsecured
by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured and/or unsecured
by) any lien or encumbrance on property (including accounts and contract rights) owned by the Borrower, whether or not the Borrower
has assumed or become liable for the payment of such obligation.


 




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2.3
Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution
(whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely
in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment
or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which
is approved by a majority of the Borrower’s disinterested directors.


 


2.4
Restriction on Stock Repurchases and Debt Repayments. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or
in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares
of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares, or repay any pari
passu or subordinated indebtedness of Borrower.


 


2.5
Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary
course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.


 


2.6
Advances and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, lend money, give credit, or make advances to any person, firm, joint venture
or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except
loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing
prior to the Issue Date, (b) in regard to transactions with unaffiliated third parties, made in the ordinary course of business
or (c) in regard to transactions with unaffiliated third parties, not in excess of $50,000.


 


2.7
Preservation of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, change the nature of its business. In addition, so long as the Borrower
shall have any obligation under this Note, the Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant
Subsidiaries that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification
necessary. Furthermore, so long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, (i) sell, divest, acquire or change the structure of any material assets other than in the ordinary
course of business, (ii) enter into any Variable Rate Transaction or investment or (iii) file any registration statements with
the Securities and Exchange Commission without complying with the registration rights agreement pursuant to the Purchase Agreement.


 


2.8
Noncircumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or
Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action
as may be required to protect the rights of the Holder.


 


2.9
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note.


 




    	 	 30	 



    	 		 



    

 


ARTICLE
III. EVENTS OF DEFAULT


 


It
shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”)
shall occur; provided, however, that, except in the case of the Events of Default listed in Sections 3.1, 3.2, 3.7, 3.9,
3.10, 3.16, 3.18, 3.19, 3.20 or 3.21 below, the Borrower shall have five (5) business days to cure such Event of Default unless
a lesser number of days is required pursuant to the provisions of this Article III:


 


3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due
on this Note, whether at maturity, upon acceleration or otherwise. In the event that the Borrower fails to pay the Principal Amount
hereof or interest thereon in full on the Maturity Date.


 


3.2 Conversion and the Shares. The Borrower (i) fails to
issue Conversion Shares to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon
exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, (ii) fails to transfer
or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for the Conversion Shares
issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or (iii) the Borrower
directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing)
(electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or
otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove
or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any Conversion Shares issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder
shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an Event of Default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a
balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s
transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty
eight (48) hours of a demand from the Holder.


 


3.3
Breach of Agreements and Covenants. The Borrower breaches any material agreement, covenant or other material term or condition
contained in the Purchase Agreement, this Note, the Warrant described in the Purchase Agreement, the Irrevocable Transfer Agent
Instructions or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith.


 


3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement,
this Note, the Warrant described in the Purchase Agreement, the Irrevocable Transfer Agent Instructions or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith or therewith shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase Agreement.


 


3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.


 


3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.


 




    	 	 31	 



    	 		 



    

 


3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the Over
the Counter Bulletin Board, the OTCQB Market or any level of the Nasdaq Stock Market or the New York Stock Exchange (including
the NYSE MKT).


 


3.9
Failure to Comply with the 1934 Act. The Borrower shall fail to comply with the reporting requirements of the 1934 Act
and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act.


 


3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.11Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.


 


3.12
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).


 


3.13
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.


 


3.14
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.


 


3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.


 


3.16
DTC “Chill”. The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s
services, such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of
the Borrower’s securities.


 


3.17
Illegality. Any court of competent jurisdiction issues an order declaring this Note, the Purchase Agreement or any provision
hereunder or thereunder to be illegal.


 


3.18.
DWAC Eligibility. In addition to the Event of Default in Section 3.16, the Common Stock is otherwise not eligible for trading
through the DTC’s Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian
programs.


 


3.19
Cross-Default. The declaration of an event of default (other than with respect to non-payment of debt referred to in the
SEC Filings) by any lender or other extender of credit to the Company under any notes, loans, agreements or other instruments
of the Company evidencing any Indebtedness of the Company (including those filed as exhibits to or described in the Company’s
filings with the SEC), after the passage of all applicable notice and cure or grace periods.


 


3.20
Variable Rate Transactions. The Borrower (i) issues shares of Common Stock (or convertible securities or Purchase Rights)
pursuant to an equity line of credit of the Company or otherwise in connection with a Variable Rate Transaction entered into in
the future or (ii) adjusts downward the “floor price” at which shares of Common Stock (or convertible securities or
Purchase Rights) may be issued under an equity line of credit or otherwise in connection with a Variable Rate Transaction entered
into in the future.


 




    	 	 32	 



    	 		 



    

 


3.21
Repayment of Certain Debt. If any of the following shall occur:


 


(a)
       The Company shall fail by December 16, 2016 to fully repay all obligations (including,
principal, interest, fees and expenses) owed by the Company or any Subsidiary to Trooien Capital, LLC and provide to the Holder
a customary payoff letter or other evidence of such full repayment (other than disputed amounts related to default interest).


 


(b)
       With respect to those certain Notes Payable, due October 2016, with interest rates of
between 8.25% and 12% (as disclosed in the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2016),
the Company shall fail by December 31, 2016 to (i) repay no less than 50% of all obligations (including, principal, interest,
fees and expenses) owed by the Company or any Subsidiary under such Notes Payable and (ii) extend the repayment of all remaining
obligations under such Notes Payment to March 31, 2016.


 


(c)       With
respect to any indebtedness (including, principal, interest, fees and expenses) of the Company owed to any officer or director
of the Company as disclosed in the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2016 (or
any similar indebtedness incurred subsequent to the filing of such Form 10-Q through the date hereof), the Company shall fail,
when such indebtedness is due, to either (i) full repay such indebtedness, (ii) convert such indebtedness into Common Stock or
(iii) extend the repayment of such indebtedness for no less than six (6) months.


 


3.22
Rights and Remedies Upon an Event of Default. Subject to applicable cure periods specifically provided for herein, upon
the occurrence and during the continuation of any Event of Default specified in this Article III, exercisable through the delivery
of written notice to the Borrower by the Holder (the “Default Notice”) (provided, however, that no Default Notice
need be provided by the Holder and no notice and no cure period shall apply in the case of the Events of Default specified in
Sections 3.1, 3.7, above), this Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full
satisfaction of its obligations hereunder, an amount (the “Default Amount”) equal to 135% of the Principal Amount
then outstanding plus accrued interest (including any Default Interest) through the date of full repayment. Holder may, in its
sole discretion, determine to accept payment part in Common Stock and part in cash. For purposes of payments in Common Stock,
the conversion formula set forth in Section 1.2 shall apply. Upon an uncured Event of Default, all amounts payable hereunder shall
immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived by the
Borrower, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall
be entitled to exercise all other rights and remedies available at law or in equity, including, without limitation, those set
forth in Section 3.23 below.


 


ARTICLE
IV. MISCELLANEOUS


 


4.1
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Holder existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:


 




    	 	 33	 



    	 		 



    

 


If
to the Borrower, to:


 


CACHET
FINANCIAL SOLUTIONS, INC.


18671
Lake Drive East


Southwest
Tech Center A


Minneapolis,
MN 55317


Attention:
Chief Financial Officer


 


If
to the Holder:


 


FIRSTFIRE
GLOBAL OPPORTUNITIES FUND LLC


1040
First Avenue, Suite 190


New
York, NY 10022


Attention:
Eli Fireman


e-mail:
eli@firstfirecapital.com


 


With
a copy by e-mail only to (which copy shall not constitute notice):


 


ELLENOFF
GROSSMAN & SCHOLE LLP


1345
Avenue of the Americas


New
York, NY 10105


Attn:
Lawrence A. Rosenbloom, Esq.


e-mail:
lrosenbloom@egsllp.com


 


4.3
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “Accredited Investor” (as defined
in the Purchase Agreement). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral by Holder
in connection with a bona fide margin account or other lending arrangement.


 


4.5
Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.


 


4.6
Governing Law; Venue; Attorney’s Fees. This Note shall be governed by and construed in accordance with the laws of
the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Note or any other agreement, certificate, instrument or document contemplated
hereby shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York.
The Borrower hereby irrevocably waives any objection to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Note or any other agreement,
certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any
action or dispute brought in connection with this the Note or any other agreement, certificate, instrument or document contemplated
hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs.


 




    	 	 34	 



    	 		 



    

 


4.7
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
Principal Amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on
this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.


 


4.8
Purchase Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement and the
documents entered into in connection herewith and therewith.


 


4.9
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder
with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or
any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled
to vote in connection with any Change in Control or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower
shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior
to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of
such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement
of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in
accordance with the terms of this Section 4.9.


 


4.10
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.


 


4.11
Construction; Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not
be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not
form part of, or affect the interpretation of, this Note.


 


4.12
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce
any right or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed
and provided that the total liability of the Company under this Note for payments which under New York law are in the nature of
interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any
other sums which under New York law in the nature of interest that the Company may be obligated to pay under this Note exceed
such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by New York law and applicable to this Note
is increased or decreased by statute or any official governmental action subsequent to the Issue Date, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to this Note from the effective date thereof forward, unless
such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate
is paid by the Company to the Holder with respect to indebtedness evidenced by this the Note, such excess shall be applied by
the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at the Holder’s election.


 


4.13
Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or
rule of law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.


 


[signature
page follows]


 




    	 	 35	 



    	 		 



    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this twelfth day of
December, 2016.


 


CACHET
FINANCIAL SOLUTIONS, INC.


 


	By:	/s/
    Bryan Meier	 
	Name:	Bryan Meier	 
	Title:	CFO	 


 




    	 	 36	 



    	 		 



    

 


EXHIBIT
A — NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert $______________ principal amount of the Note (defined below) into that number of shares of
Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of CACHET
FINANCIAL SOLUTIONS, INC., a Delaware corporation (the “Borrower”), according to the conditions of the Convertible
Promissory Note of the Borrower dated as of December ______, 2016 (the “Note”), as of the date written below. No fee
will be charged to the Holder for any conversion, except for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 


	[  ]	 	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 	 
	 	 	Name
    of DTC Prime Broker:
	 	 	Account
    Number:


 


	[  ]	 	The
    undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
    set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
    below or, if additional space is necessary, on an attachment hereto:



 


	 	 	FIRSTFIRE
                                         GLOBAL OPPORTUNITIES FUND LLC

        1040
        First Avenue, Suite 190

        New
        York, NY 10022

        Attn:
        Eli Fireman

        e-mail:
        eli@firstfirecapital.com



 


	Date of Conversion:	 	 	 
	Applicable Conversion
    Price:	 	$		 
	Costs Incurred by the Undersigned
    to Convert the Note into Shares of Common Stock:	 	$		 
	Number of Shares of Common Stock
    to be Issued Pursuant to Conversion of the Note:	 	 	 	 
	Amount of Principal Balance Due remaining
    Under the Note after this conversion:	 	 	 	 



 


	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	Date:	 	 


 




    	 	 37	 



    	 		 



    

 


EXHIBIT
B


 


FORM
OF WARRANT


 


[attached
hereto]


 




    	 	 38	 



    	 		 



    

 


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A
OR REGULATION S UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


	 	Issuance
    Date: December 12, 2016


 


CACHET
FINANCIAL SOLUTIONS, INC.


Common
Stock Purchase Warrant


 


THIS
CERTIFIES THAT, for value received, FIRSTFIRE GLOBAL OPPORTUNITIES FUND LLC (the “Holder”), is entitled
to subscribe for and purchase, at the Exercise Price (as defined below), from CACHET FINANCIAL SOLUTIONS, INC., a Delaware
corporation (the “Company”), shares of the Company’s common stock, par value $0.0001 (the “Common
Stock”), at any time prior to the 5:00 p.m., Eastern time, on December 12, 2021 (the “Warrant Exercise Term”).


 


This
Warrant is issued in connection and subject to, the terms and conditions described in the Securities Purchase Agreement, dated
December 12, 2016, between the initial Holder and the Company (the “Agreement”). Capitalized terms used herein
and not otherwise defined shall have the definitions ascribed to such terms in the Agreement. As used herein, the term “Trading
Day” means any day that shares of Common Stock are listed for trading or quotation on the OTCBB (as defined in the Agreement),
any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT (the “Trading Market”).


 


This
Warrant is subject to the following terms and conditions:


 


1.       Shares.
The Holder has, subject to the terms set forth herein, the right to purchase up to an aggregate of Eighty Nine Thousand One Hundred
and Ten (89,110) shares (the “Shares”) of Common Stock at a per share exercise price of $[TBD]2
(as subject to adjustment as provided for herein, the “Exercise Price”).


 


2.       Exercise
of Warrant.


 


(a)                
Exercise. This Warrant may be exercised by the Holder at any time prior to the expiration of the Warrant Exercise Term,
in whole or in part, by delivering the notice of exercise attached as Exhibit A hereto (the “Notice of Exercise”),
duly executed by the Holder to the Company at its principal office, or at such other office as the Company may designate, accompanied
by payment, in cash by wire transfer of immediately available funds to the order of the Company and to an account designated by
the Company, of the amount obtained by multiplying the number of Shares designated in the Notice of Exercise by the Exercise Price
(the “Purchase Price”). For purposes hereof, “Exercise Date” shall mean the date on which
all deliveries required to be made to the Company upon exercise of this Warrant pursuant to this Section 2(a) shall have been
made.


 





 



2
       FirstFire to choose on signing of documents: either (A) 200% of the closing stock
price on 12/14/16 or (B) the lesser of (i) $5.55 per share or (ii) a price per share equal to eighty percent (80%) of the price
per share issued in the next Subsequent Offering (as defined the SPA).


 




    	 	 39	 



    	 		 



    

 


(b)       Issuance
of Shares. Upon receipt by the Company from the Holder of a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Exercise, the Company shall issue and deliver or cause to be issued and delivered to or upon the
order of the Holder certificates for the Shares (or cause the electronic delivery of the Shares as contemplated by Section 2(d)
hereof) within three (3) Trading Days after such receipt (the “Deadline”). If the Company shall fail for any
reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of Shares or to which
the Holder is entitled hereunder and register such Shares on the Company’s share register or to credit the Holder’s
balance account with DTC (as defined below) for such number of Shares to which the Holder is entitled upon the Holder’s
exercise of this Warrant (an “Exercise Failure”), then, in addition to all other remedies available to the
Holder, (i) the Company shall pay in cash to the Holder on each day after the Deadline and during such Exercise Failure an amount
equal to 2.0% of the product of (A) the sum of the number of Exercise Shares not issued to the Holder on or prior to the Deadline
and to which the Holder is entitled and (B) the closing sale price of the Common Stock on the Trading Day immediately preceding
the last possible date which the Company could have issued such Shares to the Holder without violating this Section 2(b) and (ii)
the Holder, upon written notice to the Company, may void its Notice of Exercise with respect to, and retain or have returned,
as the case may be, any portion of this Warrant that has not been exercised pursuant to such Notice of Exercise; provided that
the voiding of an Notice of Exercise shall not affect the Company’s obligations to make any payments which have accrued
prior to the date of such notice. In addition to the foregoing, if on or prior to the Deadline the Company shall fail to issue
and deliver a certificate to the Holder and register such Shares on the Company’s share register or credit the Holder’s
balance account with DTC for the number of Shares to which the Holder is entitled upon the Holder’s exercise hereunder or
pursuant to the Company’s obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares
of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company, then the Company shall, within
three (3) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder
in an amount equal to the Holder’s total purchase price (including brokerage commissions and other reasonable and customary
out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate (and to issue such Shares) or credit such Holder’s balance
account with DTC for such Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in
an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times
(B) the closing sales price of the Common Stock on the date of exercise. Nothing shall limit the Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing the Shares (or
to electronically deliver such Shares) upon the exercise of this Warrant as required pursuant to the terms hereof.


 


(c)       Obligation
of Company to Deliver Common Stock. Upon receipt by the Company of a Notice of Exercise, the Holder shall be deemed to be
the holder of record of the Shares issuable upon such exercise and all rights with respect to the portion of this Warrant being
so exercised shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets,
as herein provided, on such exercise. If the Holder shall have given a Notice of Exercise as provided herein, the Company’s
obligation to issue and deliver the Shares (or cause the electronic delivery of the Shares as contemplated by Section 2(d) hereof)
shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or
consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same,
any failure or delay in the enforcement of any other obligation of the Company to the holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective
of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such exercise.


 


(d)
       Delivery of Shares by Electronic Transfer. In lieu of delivering physical certificates
representing the Shares issuable upon exercise hereof, provided the Company is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer program, upon request of the Holder, the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Share issuable upon exercise hereof to the Holder by crediting the account of Holder’s
Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.


 


(e)       Taxes.
The issuance of the Shares upon the exercise of this Warrant, and the delivery of certificates or other instruments representing
such Shares, shall be made without charge to the Holder for any tax or other charge of whatever nature in respect of such issuance
and the Company shall bear any such taxes in respect of such issuance.


 




    	 	 40	 



    	 		 



    

 


(f)       Limitation
on Beneficial Ownership. Notwithstanding anything to the contrary contained herein, that in no event shall the Holder be entitled
to exercise any portion of this Warrant in excess of that portion of this Warrant upon conversion of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which
may be deemed beneficially owned through the ownership of the unexercised portion of this Warrant or the unexercised or unconverted
portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of Shares issuable upon the exercise of the portion of this Warrant with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the
then outstanding shares of Common Stock. The “beneficial ownership” of the Holder shall be determined in accordance
with Section 13(d) of the 1934 Act, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of above, provided,
however, that the limitations on exercise may be waived by the Holder upon, at the election of the Holder, not less
than 61 days’ prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until
such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver).


 


(g)       Cashless
Exercise. Notwithstanding anything contained herein to the contrary, if and only if a registration statement pursuant to the
1933 Act covering the resale of all or any portion of the Warrant Shares is not available for the resale of such Warrant Shares
(such unregistered portion of the Warrant Shares, the “Unavailable Warrant Shares”), the Holder may, in its
sole discretion, exercise this Warrant solely with respect to the Unavailable Warrant Shares and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate Exercise Price for such Unavailable
Warrant Shares, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless Exercise”):


 


X
=Y (A - B)


A


 



with:


 


X
=        the number of Warrant Shares to be issued to the Holder


 


Y
=       the number of available Warrant Shares with respect to which the Warrant is being exercised


 


A
=       the fair value per share of Common Stock on the date of exercise of this Warrant


 


B
=       the then-current Exercise Price of the Warrant


 


Solely
for the purposes of this paragraph, “fair value” per share of Common Stock shall mean (A) the average of the closing
sales prices on the Trading Market for the twenty (20) Trading Days immediately preceding the date on which the Notice of Exercise
is deemed to have been sent to the Company, or (B) if the Common Stock is not publicly traded as set forth above, as reasonably
and in good faith determined by the Board of Directors of the Company as of the date which the Notice of Exercise is deemed to
have been sent to the Company.


 


For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued
in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for such shares
shall be deemed to have commenced, on the date this Warrant was originally issued.


 




    	 	 41	 



    	 		 



    

 


3.       Adjustment
of Exercise Price and Other Events.


 


(a)       Adjustment
for Reclassification, Consolidation or Merger. If while this Warrant, or any portion hereof, remains outstanding and unexpired
there shall be (i) a reorganization or recapitalization (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation or other
entity in which the Company shall not be the surviving entity, or a reverse merger in which the Company shall be the surviving
entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue
of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Company’s
properties and assets as, or substantially as, an entirety to any other corporation or other entity in one transaction or a series
of related transactions, then, as a part of such reorganization, recapitalization, merger, consolidation, sale or transfer, unless
otherwise directed by the Holder, all necessary or appropriate lawful provisions shall be made so that the Holder shall thereafter
be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price
then in effect, the greatest number of shares of capital stock or other securities or property that a holder of the Shares deliverable
upon exercise of this Warrant would have been entitled to receive in such reorganization, recapitalization, merger, consolidation,
sale or transfer if this Warrant had been exercised immediately prior to such reorganization, recapitalization, merger, consolidation,
sale or transfer, all subject to further adjustment as provided in this Section 3. If the per share consideration payable to the
Holder for Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value
of such consideration shall be determined in good faith by the Company’s Board of Directors. The foregoing provisions of
this paragraph shall similarly apply to successive reorganizations, recapitalizations, mergers, consolidations, sales and transfers
and to the capital stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant.
In all events, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights
and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization,
recapitalization, merger, consolidation, sale or transfer upon exercise of this Warrant.


 


(b)       Adjustments
for Split, Subdivision or Combination of Shares. If while this Warrant, or any portion hereof, remains outstanding and unexpired
the Company shall subdivide (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise)
the shares of Common Stock subject to acquisition hereunder, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common
Stock subject to acquisition upon exercise of the Warrant will be proportionately increased. If the Company at any time combines
(by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock subject to
acquisition hereunder, then, after the record date for effecting such combination, the Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of shares of Common Stock subject to acquisition upon exercise
of the Warrant will be proportionately decreased.


 


(c)       Adjustments
for Dividends in Stock or Other Securities or Property. If while this Warrant, or any portion hereof, remains outstanding
and unexpired, the holders of any class of securities as to which purchase rights under this Warrant exist at the time shall have
received or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of such
class of security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would
hold on the date of such exercise had it been the holder of record of the class of security receivable upon exercise of this Warrant
on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available to it as aforesaid during said period, giving effect to all adjustments
called for during such period by the provisions of this Section 3.


 


(d)       Adjustments
for Dilutive Issuances . If, at any time while this Warrant is outstanding, the Company sells or grants any option to purchase
or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase
or other disposition), any Common Stock or other securities entitling any person to acquire shares of Common Stock at an effective
price per share that is lower than the then Exercise Price (such lower price, the “Base Exercise Price” and such issuances,
collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or other securities so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced
to equal the Base Exercise Price. Such adjustment shall be made whenever such Common Stock or other securities are issued. Notwithstanding
the foregoing, no adjustment will be made under this Section 3(d) in respect of an Exempt Issuance. In the event of an issuance
of securities involving multiple tranches or closings, any adjustment pursuant to this Section 3(d) shall be calculated as if
all such securities were issued at the initial closing.


 




    	 	 42	 



    	 		 



    

 


An
“Exempt Issuance” shall mean the issuance of (i) shares of Common Stock or other securities to employees, officers
or directors of the Company pursuant to any stock or option or similar equity incentive plan duly adopted for such purpose, by
a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors
established for such purpose in a manner which is consistent with the Company’s prior business practices; (ii) securities
issued pursuant to a merger, consolidation, acquisition or similar business combination approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a person (or to the equityholders of a person) which
is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business
of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities; (iii) securities issued pursuant to agreements issued and outstanding as of the date hereof
or (iv) securities issued to third party investors at not less than 90% of the closing price on the previous Trading Day with
warrant coverage not to exceed the Company’s past practice ((principal amount x 90%)/exercise price).


 


(e)       Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the entity succeeding to the
Company (the “Successor Entity”) assumes in writing all of the obligations of the Company under this Warrant
and the Agreement pursuant to written agreements in form and substance reasonably satisfactory to the Holder. Upon occurrence
or consummation of the Fundamental Transaction, and it shall be a required condition to the occurrence or consummation of such
Fundamental Transaction that, the Company and the Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise of this Warrant at any time after the occurrence or consummation of the Fundamental Transaction, as elected
by the Holder solely at its option, shares of Common Stock, shares of capital stock of the Successor Entity (“Successor
Capital Stock”) or, in lieu of the shares of Common Stock or Successor Capital Stock (or other securities, cash, assets
or other property purchasable upon the exercise of this Warrant prior to such Fundamental Transaction), such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights), which
for purposes of clarification may continue to be shares of Common Stock, if any, that the Holder would have been entitled to receive
upon the happening of such Fundamental Transaction or the record, eligibility or other determination date for the event resulting
in such Fundamental Transaction, had this Warrant been exercised immediately prior to such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such Fundamental Transaction, as adjusted in accordance with
the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the occurrence
or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities,
cash, assets or other property with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that, and any applicable Successor Entity shall ensure that, and it shall
be a required condition to the occurrence or consummation of such Corporate Event that, the Holder will thereafter have the right
to receive upon exercise of this Warrant at any time after the occurrence or consummation of the Corporate Event, shares of Common
Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common Stock (or other securities,
cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event. The provisions of
this Section 2(e) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events.


 


(f)       [RESERVED.]


 




    	 	 43	 



    	 		 



    

 


(g)       As
used herein, the term “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether
or not the Company is the surviving corporation) another entity, or (ii) sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company to one or more entities, or (iii) make, or allow one or more
entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more entities
making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares
of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all entities
making or party to, or affiliated with any entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all entities making or party to, or Affiliated with any entity making or
party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more entities whereby all such entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding
shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the entities making or party to, or affiliated with any entity making or party to, such stock purchase agreement or
other business combination were not outstanding; or (z) such number of shares of Common Stock such that the entities become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock,
or (v) reorganize, recapitalize or reclassify its Common Stock such that such modified Common Stock no longer has the residual
right to dividends or distributions form the Company or the residual right to vote on matters given to the common stock holders
under Delaware law, (B) that the Company shall, directly or indirectly, including through subsidiaries, affiliates or otherwise,
in one or more related transactions, allow any entity individually or entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held
by all such entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such entities to effect a statutory short form merger or other
transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders
of the Company or (C) directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or
that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion
of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 


(h)       [RESERVED.]


 


(i)       Notice
of Fundamental Transactions and Adjustments. The Company shall provide the Holder with no less than five (5) business days
written notice of the public announcement of any Fundamental Transaction. In addition, upon any adjustment of the Exercise Price
and any increase or decrease in the number of Shares purchasable upon the exercise of this Warrant, then, and in each such case,
the Company, within 30 days thereafter, shall give written notice thereof to the Holder at the address of such Holder as shown
on the books of the Company, which notice shall state the Exercise Price as adjusted and, if applicable, the increased or decreased
number of Shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of
each.


 


4.       Notices.
Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be undertaken in accordance
with the provisions of the Agreement.


 




    	 	 44	 



    	 		 



    

 


5.       Removal
of Legend. The Holder shall have the right to cause restrictive legends removed from the Shares as provided for in the Agreement.


 


6.       Fractional
Shares. No fractional Shares will be issued in connection with any exercise hereunder. Instead, the Company shall round up,
as nearly as practicable to the nearest whole Share, the number of Shares to be issued.


 


7.       Rights
of Stockholder. Except as expressly provided in Section 3 hereof, the Holder, as such, shall not be entitled to vote or receive
dividends or be deemed the holder of the Shares or any other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall
have been issued, as provided herein.


 


8.       Transfer;
Multiple Warrants; Lost Warrant; New Warrants. This Warrant and the Shares may be offered for sale, sold, transferred, pledged
or assigned without the consent of the Company, provided that any such offer, sale, transfer, pledge or assignment must be undertaken
in accordance with applicable law, rule and regulation (including the 1933 Act). This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants representing in the aggregate the right
to purchase the number of Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Shares as is designated by the Holder at the time of such surrender. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant representing
the right to purchase the Warrant Shares then underlying this Warrant. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as
indicated on the face of such new Warrant, the right to purchase the Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to this Section 8, the Shares designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same
as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.


 


9.       Miscellaneous.


 


(a)       This
Warrant and disputes arising hereunder shall be governed by and construed and enforced in accordance with the laws of the State
of New York applicable to agreements made and to be performed wholly within such State, without regard to its conflict of law
rules. Venue for resolution of disputes shall be as provided for in the Agreement.


 


(b)       The
headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.


 


(c)       The
covenants of the respective parties contained herein shall survive the execution and delivery of this Warrant.


 


(d)       The
terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company
and of the Holder and of the Shares issued or issuable upon the exercise hereof.


 


(e)       This
Warrant and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the
parties with regard to the subject hereof.


 




    	 	 45	 



    	 		 



    

 


(f)       The
Company shall not, by amendment of its Certificate or Articles of Incorporation or Bylaws, or through any other means, directly
or indirectly, avoid or seek to avoid the observance or performance of any of the terms of this Warrant and shall at all times
in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate
in order to protect the rights of the Holder contained herein against impairment.


 


(g)       Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at
its expense, will execute and deliver to the Holder, in lieu thereof, a new Warrant of like date and tenor.


 


(h)       This
Warrant and any provision hereof may be amended, waived or terminated only by an instrument in writing signed by the Company and
the Holder.


 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.


 


	 	CACHET
    FINANCIAL SOLUTIONS, INC.
	 	 	 
	 	By:
    	/s/
    Bryan Meier
	 	Name:
    	Bryan
    Meier
	 	Title:
    	CFO


 




    	 	 46	 



    	 		 



    

 


Exhibit
A


 


EXERCISE
NOTICE


TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS


WARRANT
TO PURCHASE COMMON STOCK


 


CACHET
FINANCIAL SOLUTIONS, INC.


 


The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”)
of CACHET FINANCIAL SOLUTIONS, INC., a Delaware corporation (the “Company”), evidenced by the attached
Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.


 


The
holder shall tender payment for such shares of Common Stock (i) in the sum of $___________________ to the Company in accordance
with the terms of the Warrant or (ii) via cashless exercise, in each case in accordance with the terms hereof.


 


The
Company shall deliver to the holder __________ Warrant Shares:


 


______       in
certificated form


 


_____       through
the facilities of the DTC via the following instructions:


 


________________________________


________________________________


________________________________


 


Date:
_______________ __, ______


 


	 	 
	Name of Registered Holder	 



 


	By:	 	 
	Name:	 	 
	Title:	 	 


 




    	 	 47	 



    	 		 



    

 


Exhibit
B


 


FORM
OF ASSIGNMENT


 


FOR
VALUE RECEIVED, ___________________________________ hereby sells, assigns and transfers to each assignee set forth below all of
the rights of the undersigned under the Warrant (as defined in and evidenced by the attached Warrant) to acquire the number of
Shares set opposite the name of such assignee below and in and to the foregoing Warrant with respect to said acquisition rights
and the shares issuable upon exercise of the Warrant:


 


	Name
    of Assignee	Address	Number
    of Shares
	 	 	 
	 	 	 
	 	 	 
	 	 	 


 


If
the total of the Shares are not all of the Shares evidenced by the foregoing Warrant, the undersigned requests that a new Warrant
evidencing the right to acquire the Shares not so assigned be issued in the name of and delivered to the undersigned.


 


	 	Name
    of Holder (print): ______________________________
	 	(Signature):
    ______________________________________
	 	(By:)
    ___________________________________________
	 	(Title:)
    __________________________________________
	 	Dated:
    __________________________________________


 




    	 	 48	 



    	 		 



    

 


EXHIBIT
C


REGISTRATION
RIGHTS


 


All
of the Conversion Shares and Warrant Shares will be deemed “Registrable Securities” subject to the provisions of this
Exhibit C. All capitalized terms used but not defined in this Exhibit C shall have the meanings ascribed to such terms in the
Securities Purchase Agreement to which this Exhibit is attached.


 


1.       Piggy-Back
Registration.


 


1.1Piggy-Back
Rights. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement under the
1933 Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement (i)
filed in connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan or
(iii) in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing to the
holders of Registrable Securities appearing on the books and records of the Company as such a holder as soon as practicable but
in no event less than ten (10) days before the anticipated filing date of the Registration Statement, which notice shall describe
the amount and type of securities to be included in such Registration Statement, the intended method(s) of distribution, and the
name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of Registrable
Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request
in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall
cause (i) for a non-underwritten offering, cause such Registrable Securities to be included in such registration and (ii) for
an underwritten offering, shall request the managing underwriter or underwriters of a proposed underwritten offering to permit
the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar
securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back
Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such Piggy-Back Registration.


 


1.2Withdrawal.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.


 


1.3       The
Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not to offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.


 




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1.4
       The Company may request a holder of Registrable Securities to furnish the Company such
information with respect to such holder and such holder’s proposed distribution of the Registrable Securities pursuant to
the Registration Statement as the Company may from time to time reasonably request in writing or as shall be required by law or
by the SEC in connection therewith, and such holders shall furnish the Company with such information.


 


1.5       All
fees and expenses incident to the performance of or compliance with this Exhibit C by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed
for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability
insurance, if the Company so desires such insurance, (vi) fees and expenses of all other persons or entities retained by the Company
in connection with the consummation of the transactions contemplated by this Exhibit C and (vii) reasonable fees and disbursements
of a single special counsel for the holders of Registrable Securities (selected by holders of the majority of the Registrable
Securities requesting such registration), up to $10,000 for each registration. In addition, the Company shall be responsible for
all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense
of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities
exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any holder
of Registrable Securities.


 


1.6       The
Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the
officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit C, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit C of which the Company is aware.


 


1.7       If
the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company
and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that
it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
sentence. Notwithstanding the provisions of this Section 1.7, neither the Buyer nor any holder of Registrable Securities shall
be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by
such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related prospectus
exceeds the amount of any damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.


 


[End
of Exhibit C]


 




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Schedule
3(c)


 


The
following is a list of equity securities and debt issued by Cachet Financial Solutions, Inc. (the “Company”) since
September 30, 2016 not otherwise reported in a Current Report on Form 8-K:


 


	 	● 	October
    8, 2016 – Warrants to purchase 8,334 shares of the Company’s common stock at $4.94 per share were issued to Michael
    J. Hanson, a director of the Company (“Mr. Hanson”), pursuant to a note payable agreement, dated February 11,
    2016, amended March 29, 2016 and July 27, 2016, between the Company and Mr. Hanson.
	 	 	 
	 	●	October
    29, 2016 – Warrants to purchase 16,667 shares of the Company’s common stock at $4.94 per share were issued to
    James L. Davis, a director of the Company (“Mr. Davis”), pursuant to a note payable agreement, dated February
    11, 2016, amended March 29, 2016 and July 27, 2016, between the Company and Mr. Davis.
	 	 	 
	 	●	November
    3, 2016 – Warrants to purchase 2,271 shares of the Company’s common stock at the lower of $5.55 per share and
    80% of the per share purchase price in the Company’s next underwritten public offering were issued to Sutter Securities
    Incorporated pursuant to a finders agreement between the Company and Sutter Securities Incorporated, dated November 2, 2016.
	 	 	 
	 	● 	November
    7, 2016 – Warrants to purchase 8,334 shares of the Company’s common stock at $4.94 per share were issued to Mr.
    Hanson, pursuant to a note payable agreement, dated February 11, 2016, amended March 29, 2016 and July 27, 2016, between the
    Company and Mr. Hanson.
	 	 	 
	 	●	November
    28, 2016 – Warrants to purchase 16,667 shares of the Company’s common stock at $4.94 per share were issued to
    Mr. Davis, pursuant to a note payable agreement, dated February 11, 2016, amended March 29, 2016 and July 27, 2016, between
    the Company and Mr. Davis.
	 	 	 
	 	● 	November
    28, 2016 – The Company entered into a securities purchase agreement with The Gilbert Matthews Family Trust UAD 4/25/12
    (the “Matthews Trust”) pursuant to which the Company agreed to issue to the Matthews Trust convertible notes,
    due November 2017, in an aggregate principal amount of $26,316 and warrants to purchase 4,267 shares of the Company’s
    common stock in exchange for an aggregate purchase price of $25,000. The notes are convertible into the Company’s common
    stock at the lower of $7.00 per share and 80% of the per-share offering price in the Company’s next underwritten public
    offering. The warrants have an exercise price of the lower of $5.55 and 80% of the per-share offering price in the Company’s
    next underwritten public offering.
	 	 	 
	 	●	December
    7, 2016 – Warrants to purchase 8,334 shares of the Company’s common stock at $4.94 per share were issued to Mr.
    Hanson, pursuant to a note payable agreement, dated February 11, 2016, amended March 29, 2016 and July 27, 2016, between the
    Company and Mr. Hanson.
	 	 	 
	 	● 	Indebtedness
    of $1.4 million to FLMM Ltd., an affiliate of Kitano on terms to be determined.


 




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